Tech Giants Tremble: Foreigners Shed Japanese Stocks

Overseas investors, driven by concerns over tech stock valuations and geopolitical tensions, sold Japanese equities for a second consecutive week. The divestment totaled 701 billion yen, despite a year-to-date investment spike. Domestic investors also moved defensively, favoring short-term bills and long-term bonds over equities.

Overseas investors have sold Japanese equities for the second consecutive week as of June 6, officials reported on Thursday. Concerns over technology share valuations, prompted by Broadcom's disappointing earnings, have driven this trend.

The divestment marked a significant increase to 701 billion yen—up from 491.5 billion yen a week prior. Supporting this downturn in sentiment are expectations of a hawkish Federal Reserve following a stronger U.S. jobs report, alongside rising tensions in the Middle East. Consequently, the Nikkei index has dropped approximately 7.3% from its recent record high of 68,786.49 points.

Despite the retreat, foreign investments in Japanese stocks have surged this year to 10.63 trillion yen, compared to 1.26 trillion yen during the same stretch last year. Meanwhile, Japanese investors are opting out of overseas equities, favoring purchases in short-term bills and long-term bonds instead—indicating a more cautious investment approach.